$49 Million National Grid Gas Plant Cleanup Settlement

British energy giant National Grid and insurer ACE Ltd. have settled their $49 million dispute over pollution cleanup at three former gas plants on Long Island, N.Y., on the third day of what was to be a lengthy trial. National Grid unit KeySpan Gas East and ACE unit Century Indemnity Co. settled the dispute over a $31 million pollution cleanup in Sag Harbor, a $7.4 million cleanup in Glen Cove, and a $10.3 million cleanup in Halesite. The terms of the settlement are confidential.

With the settlement, ACE is now finished with fights over five of seven sites originally at issue. Two were dealt with in a 2014 trial, which KeySpan won, three have now settled, with two more, Hempstead and Bay Shore, still pending. The cleanups were scars of a gaslight era in which many towns made their own gas from coal. KeySpan was formerly Long Island Lighting Co., once the owner of many gasworks on the bedroom-community island. LILCO has insisted through almost two decades of litigation that inactive “runoff” liability holding insurer Century should help pay for the three cleanups under excess liability policies issued by forerunner Cigna in the 1950s and 1960s.

LILCO says that for 18 policy years, from 1953 to 1969, the three long-shuttered plants were quietly leaching tar into the groundwater. Those count as harms and give rise to coverage, the company says. It was contended that “Century promised to protect KeySpan against a legal claim that KeySpan caused damage to property belonging to someone else.” Although the coal tar sat on LILCO property, the groundwater it polluted was New York state’s. The damage occurred during the policy years, as the water leached, Smith said – even into the 1990s. Century says LILCO documents reveal inklings of trouble related to the sites as early as 1992, but that LILCO didn’t report the matter to Century immediately. Century says this negates any coverage.